The black market is not a physical place, but rather an economic activity in which merchandise and/or services are bought and sold illegally. Also called the “underground market,” this market gets its name due to the fact that its activity is conducted out of sight and often “in the dark,” outside the sight of law enforcement. It can be illustrated by something as innocent and innocuous as selling gum on the playground, or by something as serious as the sale of smuggled weapons or drugs.

Many factors can make a transaction illegal, thus qualifying it as a black market transaction. The good or service itself may be illegal, such as illicit drugs, weapons, or prostitution. One prime example of an illegal market created because of an illegal product was the result of prohibition. After alcohol was outlawed in the U.S. in 1919, it was smuggled into the country and sold at speakeasies and private bars. The result was an era of organized crime and an estimated 500 million US dollars (USD) in lost tax revenues annually.

An example of an illegal service sold on the black market is prostitution. Outlawing the prostitution of women and children throughout most of the world has created a huge illicit sex trade. Countries where this type of illegal market flourishes are a destination spot for those seeking to pursue this activity.

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In other cases, goods may be stolen and then re-sold on the black market. When a good is euphemistically referred to as having “fallen off the back of a truck,” usually it means that it has been stolen for the purpose of being sold illegally. If you are purchasing a new stereo, for example, from an individual at an extremely low price, there’s a good chance that it’s been stolen. Another way that a transaction can be illegal is if it is an otherwise legal good or service that is bought or sold in such a way as to avoid proper licensing or taxes. This is the case with unregistered firearms and cigarettes, which usually include a hefty local, state, or federal tax.

Due to man’s inherently entrepreneurial nature, coupled with government’s pesky tendency to regulate, black markets can and do exist everywhere. They do, however, tend to develop more readily in states or countries with especially heavy regulation. Even though a good or service becomes outlawed or heavily regulated, the market may continue to demand it. As a result, the black market springs up to meet the market’s demand. This is the case when governments place price controls, rationing or complete prohibition on a good or service.

Although the consumer’s demand is met, usually the seller or “black marketeer” is the one who profits from a transaction. Prices on this market tend to be higher due to smaller supply and constant demand. The risk that a marketeer takes in acquiring and selling a good or service is also included in the price. If it is a difficult good to acquire, it will have a higher price as well. At times, prices can be lower if the seller has lower “overhead” because he or she stole the good or is avoiding high taxes.

Consumers are often willing to overlook the illegality of a black market transaction if they feel that the good or service is “harmless.” This is often the case with illegal prostitution and also applied to alcohol sales during prohibition. Although some people think that most illegal transactions are relatively harmless, the money generated is often used for nefarious purposes. The mafia in the U.S. thrived during prohibition, resulting in bloody battles over turf and profits. Governments combating illegal markets spend vast fortunes fighting organized crime and racketeering, and lose millions in tax revenues from the prohibited good.

Many solutions to the black market have been proposed, including deregulation, legalizing drugs and prostitution, and increasing supply of a particular good. Some argue that this is a concession to criminals and drug users, while others argue that government resources can be put to better use.

Discuss this Article

anon313815Post 75

@ Post42: The black market existed well before the United States banned alcohol. Think about slavery! You don't believe that was any kind of a black market, or hell let's go to the Greeks. You don't think they illegally traded or sold human beings for slavery and prostitution? The fact is, that it happens every day and it's all around us.

Whether you participate it in or not we, are all involved in it in some way or another. Illegal downloading of music or movies, and bootlegging them for profit.

Black markets are everywhere, all the time. Just look at what is prohibited or illegal or scarce and you will know there is a market you don't see for it. Governments create black markets by statute and regulation. If they said and did nothing, the black markets would not exist or would not thrive.

since the black market is actually just the act of illegally selling things from candy, songs downloaded from the internet illegally and giving them freely like limewire does. Everyone becomes part of the black market whether they know it or not. buying a piece of candy then selling it for more is actually an act of black marketing, believe it or not. the black market cannot be stopped. it will stay as long as there is a way of trade and service like the entire world uses.

Some of you seriously need to take your time when you read an article. You are all asking questions that were covered and answered. Were the answers too detailed or just the words were too big for you to understand!

I need a chemical called chloroform for a story I'm writing, but as far as I know, it's practically impossible to come by unless you happen to be some kind of scientist. In the story, though, I'm trying to keep things at least fairly legal, but I think I'll need the assistance of the black market. Thing is, I don't know how it works exactly.

Ninety percent of your questions are answered in the article. Where is the black market? It's not a place. What is sold on the black market? Anything that is illegal. Reason for existence? Illegal goods are *illegal!* Getting inside it? What? It's not a place. And that is precisely what undercover policemen do with the drug trade. There is no central "Black Market". It is a euphemism for any illegal transaction.

The black market seems helpful in certain places. Why don't you just make some of the things legal in third world countries rather than have them continue on doing things illegally that will hinder the growth of the countries?

The black market was made in reaction to the united states banning beer, whiskey that kind of stuff. Since then it expanded to include Illegal weapons, submachine guns, assault rifles, explosives, drugs, animals apparently, possibly even down to gasoline and other types of fuel. Whatever you buy and sell is probably being sold or bought cheaply on the black market.

There's a kind of organization and disorganization to the black market, depending on certain demands or goods. Like nasturtium said, it depends on the culture, so it can be highly organized, or it can be one person.

If you're buying and selling illegal items, you're black marketing. Gangs, the Mafia, any organized crime buys and sells some type of goods on the black market, either in the States, the UK or anywhere. ESD for life.

the black market is real! this is a serious issue! the government might be tracking down people who sell drugs through the black market, but i think we should be more concerned with the selling of animals, endangered animals.

For example people are buying Komodo dragons, which are really rare for a pet! isn't that crazy? a Komodo dragon has a really toxic poison in its saliva and animals die when they get in touch with the saliva. However, scientists don't want it to be killed because they need to know what the mystery is, what the Komodo dragon has in its blood that makes itself immune to its own saliva.

Hey don't they sell body parts and babies and stuff like that on the black market? I heard they do in some cases and I recently looked up a movie called "Sick Nurses". It's where the nurses use dead body parts from their patients to sell on the black market.

Many things are sold on the black market such as drugs, weapons and prostitution. And sometimes things such as kids. This might seem weird but like in china they will buy a boy kid from a black marketer because they have a girl and can't have another kid because of the one child policy.

Depending on the country, the black market can be very accepted. In the US, it is often looked down upon, but in many third world countries, everyone buys things on the black market - it's just how it's done. It just depends on the culture.

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